Hulbert: Are Hedge Funds Overhyped?

Hedge funds are having a mediocre year at best. Is it time to consider other options? Mark Hulbert joins discusses on Markets Hub. Photo: Getty Images.

This transcript has been automatically generated and may not be 100% accurate.

... I ... when it does not come cheaply is you ... you will be up to Fort them know ... you are paying for performance by ... the really getting an extra level of performance that you can get elsewhere intervention question ... Mark Hulbert today wrote about this in this column for MarketWatch ... Mark and I subscribe to just ... to read GDP little newsletter out there and get the fee income returns ... I would get from a hedge fund manager ... it seems harder to leave it that the data shows so far this year among the several hundred advisors I tracked most of which are editors are at ... the advisors are at it ... and it is an investment newsletters ... they're up on double the average return of the of the typical it up so ... this year ... you're not really getting the return from the hedge fund professionals they are told ... longer term the day to closer but still the very fact that it closes amazing the last decade ... the analysts return of the typical fund six point six percent versus six point three of the newsletter's that I monitor so ... it's a it's a far more sobering picture then at least I think the hedge fund industry would like to bully ... and when you when you when you sign on to a hedge fund manager who know about the two and twenty fee structure we know that you're paying a premium for performance and at what they say that they're they're providing something you can't get elsewhere ... this suggests that you could get elsewhere probably for a lot cheaper ... I sure they have a lot of that column calling him a call with a professional I think we all think that we don't know anything are so these are retail investors ... we were told that I was that somehow we need professionals to help us but ... I'm not sure that dead ... ended the professionals lined up by justifying all their high fees now one other things the hedge fund industry will tell you ... is that okay well perhaps more returns are where we show our stuff ... that its introduction of volatility ... we had to start work on some hedge funds ... but even there I'm not sure that they are really beer out of the Dewan that ... changing I chose the date of the last decade than the ... typical hedge fund is remarkably correlated ... with the SNP five hundred so it's not exactly ... as much of a head is I think the market of late ... now I how much of this is I mean who taught these returns are really talking about say ... the newsletter industry as a whole hedge funds as a whole ... how much of this really comes down to you finding ... the right newsletter or the right hands on ... I think that's a very good point I think it's worth stressing ... the reason being taught about the industry's as a whole is that hedge funds have a quarrel about an hour for high net worth individuals for the best and brightest go ... where they were to turn their noses up that investment is the editor reserves ... the right to claim are a bunch of lunatics offer motorists who ... interviewed the bells that so that the kitchen table or on a laptop and try to figure things out ... into singing at a bank in the next star ... contracts that in in the two worlds the fact that the returns are as close to each other for Marco ... anyhow I didn't have in my mind and people might be inching to see the folly investing newsletters other adding that stand out in your mind is particularly good ones ... oh absolutely we've been tracking industry now back at two nineteen eighties we had over three decades of research ... most newsletters and better and longer for a couple ... going back to nineteen eighty the top performer is done very very well Coltrane speculator inside the battered by the name Al Franken strongly edited by John Buckingham another good performers about a lion investment survey of top ranked stocks the ... very very well the thing and then ... I ... excellent stuff Mark Albers appreciate it ...